Wednesday, August 25, 2010

Another committee on IIM autonomy

Yet another committee will go into the issue of autonomy for central universities, IITs and IIMs, TOI reports:

The HRD ministry has set up a high-power committee, under noted legal expert N R Madhava Menon, to come with a comprehensive policy on the issue of autonomy for higher educational institutions like central universities, IITs and IIMs.

The six-member committee, which also has three additional special invitees, has been asked to review the state of institutional autonomy in central universities, IITs and IIMs in academic governance and financial matters.

The panel will recommend mechanism for norm-based funding of central educational institutions for development and maintenance, with an aim to enhance their financial autonomy.

It will examine the decentralisation of autonomy within central universities, IITs,IIMs and suggest measures by which institutional autonomy can percolate to governance structure within the university and to the teacher.
An IIM review committee under R C Bhargava had submitted a report on governance of IIMs in 2008. Another committee under the same Bhargava is currently looking at governance issues and its report is awaited. What would be the rationale for another committee on autonomy and accountability and covering the IIMs again?

Monday, August 23, 2010

Paid news

In the last elections, several newspapers are said to have covered election campaigns for a price. This phenomenon of 'paid news' was exposed by P Sainath of the Hindu following which the Press council of India (PCI) constituted a sub-committee to go into the matter.

The sub-committee confirmed that news had indeed been paid for and furnished whatever information it had been able to gather in a report submitted to PCI. Following this, the PCI decided, by a narrow majority, not to make the report public. Mitali Saran has some strong words on the subject in her column in BS:

Concerned journalists on the panel called the PCI a ‘toothless tiger’. They talked about how in the 1980s and 1990s, regional newspapers didn’t pay their reporters a salary, but gave them a commission on any ads they brought in; how corporate management is increasingly sidelining editors; how journalists are given lists of subjects to cover in a target number of column inches.

The PCI sub-committee report, the burial of that report, and the media’s lack of interest in the topic points to a complicity so deep that nobody can afford to turn the lens on themselves. It takes the idea that there are always a few rotten apples in the barrel, and shows that the one you bite into every morning is ridden with maggots. There’s no better reason for you to care.

I have long maintained that two of the pillars of the fourth estate that need strengthening are the judiciary and the media. There are signs of greater accountability being brought into the judiciary. When will the media's turn come?

Sunday, August 22, 2010

Land for institutions of higher education

The Punjab government has given ISB 100 acres of land in Mohali. BS is critical of institutions of higher education appropriating vast tracts of land:

Why do India’s institutions need so much land, and that too subsidised by the taxpayer? In an increasingly urbanising India, with land costs going up, the idea of large campuses, and of ones far away from city centres, should be discouraged. Some of the world’s best educational institutions function out of tall buildings in city centres. The only purpose large campuses serve is to preserve greenery and forest cover! If private institutions wish to acquire land, they should pay for it, more so if these are institutions that charge hefty fees and have well-heeled trustees, like the ISB does.

Why would they want 100 acres to build a business school that houses 500-odd students? Government-run universities and colleges, which cater to thousands of students and offer training in a number of disciplines, often operate from much less land. Is it any wonder that people whose land is acquired by the government and given out free to others feel the way they do?

There are answers to the questions raised here. Renting apartments is not as easy or inexpensive as it is in the US and elsewhere- a new batch of 500 or 1000 students will not find it easy to find rental accommodation in the vicinity of a college. Housing faculty and students on a campus makes for smooth functioning of the institutions round the year despite dislocations in the cities in which they operate. Campus accommodation is one of the few attractions of an academic position at IIT or IIM and it remains one of the very few means of attracting Indian faculty from abroad.

That said, questions may be asked as to why ISB needs so much land when it uses a visiting faculty model. We also need to push the IITs and IIMs to scale up their capacities on the land they occupy.

Thursday, August 19, 2010

Licensing new private banks

The RBI has come out with a detailed discussion paper on the licensing of new private banks. The paper documents the Indian experience with new private banks and also provides information on regulations in other countries.

Prime candidates for new banks are industrial houses and NBFCs. The latter are regulated and the RBI will know whom to let in and whom not to. Industrial houses setting up banks is a dicier proposition. I discuss the issues in my ET column, Tread warily on new private banks.

My bottomline: let us make a modest start with allowing industrial houses to set up exclusively rural banks. That is where we need initiative and capital. The urban crowd and industry are well taken care of. Let us watch the performance of industrial houses for a few years and then take a view on whether they should be allowed to spread their wings.

Wednesday, August 18, 2010

India decoupled from the world now?

India is eyeing 9% growth when growth prospecs in the US and other advanced economies are uncertain. Fiscal and monetary policies have been tightened over the past several months in India. In the advanced economies, the stimulus vs austerity debate has not died down. Is India getting decoupled in the present situation? Maybe. We got couple in 2009 because of panic outflows of capital. In today's uncertain condition, the same sort of capital outflow appears unlikely. So we may steam ahead regardless of what happens in the advanced economies.

More on this in my last ET column, The world falters, India booms

Tuesday, August 17, 2010

India and China

One of the tantalising questions in economic debate is who will win the economic race in the coming years: India or China? Until recently, there was not much to debate. Everybody knew it would be China. But, in the last year or so, one notices a shift. India has a better demographic profile. China's currency is set to appreciate which will drag down export growth, so the contention goes. India will move into double digits. China will drop into a single digit.

Arvind Subramaniam wades into this debate and he favours China. He sees corruption, insurgency and poor governance in general as going against India.

Long-run growth depends on the quality of supporting public institutions. True, the India of today is less of a regulatory nightmare than before the opening-up in 1991. Some institutions – those that hold elections, preserve financial stability and regulate telecommunications, for example – have worked well. But these exceptions apart, the state is weak and fraying. Policy reforms do not deserve the spectacular acceleration in growth that the economy has delivered.

Well, then you have to explain why economic growth has improved in recent years. There is more corruption. Is there more insurgency? We may hear more about the Naxalite problem but that does not mean there we have no faced insurgency earlier- we have had enormous problems in the North- East, some of which continues. Is governance worse? There are some areas- such as tax services- where one sees an improvement. Telecom has seen a revolution. The RTI is a big change. I am not sure governance is worse than it was ten years ago.

The explanations for improved growth that Subramaniam provides- more entrepreneurship, bigger role for the private sector, competition among states- are not the whole story. The solid underpinning comes from higher savings and investment. If these continue to rise, why should governance problems hold up growth?

Incidentally, Morgan Stanley is willing to bet on India, a rather surprising forecast coming from a firm that was quite bearish about India's growth prospects some time ago.

Monday, August 09, 2010

HP boss pays for an indiscretion

HP boss Mark Hurd's ouster as CEO is a case of a board setting unusually high standards. In an earlier era, these standards may even have been regarded as puritanical.

Hurd was ousted by the board for what appears to be a minor indiscretion, according to an FT report. Hurd was accused of sexual harassment by a woman contractor. To his credit, Hurd promptly handed over the letter to the company's general counsel who took it to the board. The board's investigation found no evidence of sexual harassment but believed that Hurd had fiddled with expense statements to conceal his meetings with the contractor.

The amount involved was $20,000 over a two year period. This was considered a sufficiently serious ethical lapse to fire one of America's best-performing CEOs. Of course, it is possible that the board also believed that if it dug deeper, it might uncover worse.

Hats off to the board of HP- not many boards would have taken such a tough line. Partly, the tough line shows the extent to which boards themselves are under close scrutiny in the US.

IIT Kharagpur had quotas for faculty's children!

For over 40 years, IIT Kharagpur kept aside seats for children of faculty and staff, letting in students who had failed to secure admission through the JEE. This sensational disclosure appears in HT which procured the details under the RTI Act (for the nth time, one marvels at the wonders of this great piece of legislation):

Documents accessed by HT using the RTI Act show the country’s oldest IIT — started in 1951 — blocked 25 per cent of its seats in popular five-year integrated science courses (up to M.Sc level) for handpicked nominees, even as students from the rest of India had to clear the IIT-JEE for admission.

IIT wards merely needed 60 per cent marks in their Class XII Board examination and should have appeared in the IIT-JEE to be eligible for the quota seats, doled out at the institute director’s discretion.

Between 2003 and 2005, those who got in through this illegal quota didn’t even need to appear for the entrance exam.

The secret quota was suspended in 2005, the year the RTI Act was launched, and was abandoned in 2006 under pressure from the Joint Admission Board of all IITs, which organises entrance examination.......

The IIT admitted 88 students through the secret quota bet-ween 1998 and 2005, including 50 in 2003 and 2004, documents reveal. The quota was never disclosed in admission brochures — unlike all other reservations for backward communities that the IITs have.

Among the beneficiaries was the ward of the chairman of the IIT-JEE in 2006. One ex-director calls it a 'shameful chapter' and claims he did his best to stop it but could not convince his colleagues. Sorry, that's a lame excuse. The right thing to do would have been to take the matter to the Board and the ministry and to have gone public with the facts. The Board of IIT-Kgp must have the matter thoroughly investigated and documented and place the full record in the public domain.

Business Standard has a scathing edit on the subject. As the edit points out, these are the same characters who have opposed quotas on the ground that these dilute quality.

I may mention here that early in IIMA's history an attempt was made to introduce similar quotas. A senior professor made the request to Ravi Matthai, the legendary first full-time director of IIMA. Matthai took the proposal to the faculty where it was promptly shot down as Matthai must have known it would.